Pretax earnings for Barclays Bank PLC in the United States posted a sharp turnaround in 1994, rising to $379.2 million after heavy losses of $880 million a year earlier.
Most of the improvement came from a steep drop in provisions for bad loans and from the sale of assets in the United States.
Richard Webb, head of Barclays U.S. operations, was unavailable for comment.
However, Martin Taylor, Barclays' chief executive in London, noted in a statement that the bank has "continued to simplify the portfolio by selling businesses which, although attractive in their own right, had little relation to our more essential activities."
As part of a large-scale divestiture from low-margin commercial lending in the United States in favor of capital-markets-related operations, the London-based bank last year sold Barclays Business Credit, a U.S. asset- backed finance company, at a profit of $275 million, to Shawmut National Corp.
Barclays has also reached agreement to sell its U.S. mortgage servicing portfolio, a source of substantial losses in 1993, and related servicing facilities of BarclaysAmerican Mortgage.
Provisions for bad and doubtful loans also fell dramatically. According to results released Tuesday, the bank recovered some $19 million in provisions, compared with $475 million it set aside a year earlier.
"Provisions made (in the United States) in previous years have proved sufficient to permit the gradual disposal of the impaired loans," Barclays said in a statement.
Barclays has been cutting back on its U.S. commercial banking for several years. The bank sold two retail units, Barclays Bank of California in 1988, and Barclays Bank of New York in 1993. It sold the Charlotte, N.C.-based commercial finance unit, BarclaysCommercial Corp. in 1994.
As part of a wholesale restructuring, Barclays last year placed the better portion of its U.S. commercial banking operations, including more than $6 billion in low-margin or problem loans, into a special unit known as United States Transition, pending their sale or disposal.
Management of the bank's U.S. operations was turned over to Barclays de Zoete Wedd, its investment banking arm, which has been expanding trading and securities-related activities, and assisting large corporations that require international banking services.
Worldwide, Barclays' pretax earnings rose to $2.97 billion in 1994 from nearly $1.1 billion in 1993, with much of the improvement coming from a reduction in bad-debt provisions. Total assets fell slightly, to $260 billion from $265 billion.
Within the United States, the bank sold or wrote off more than $3 billion in assets and is planning to dispose of another $3 billion. Barclays held nearly $27 billion in U.S. assets at yearend, down from $30.5 billion a year earlier.
Barclays chairman Andrew Buxton and Mr. Taylor emphasized that the results showed the bank was now back on track after several years of heavy losses. The downturn was due to excessive bad corporate and real-estate- related lending.
In a switch from past policy, when Barclays sought to increase earnings by increasing volume, Mr. Taylor said the bank sees "no merit in chasing high-margin lending or easing the criteria by which we judge lending propositions merely to increase our loan book and put future returns at risk."
In line with this policy, Barclays said it cut loans and advances in the United States by 25% to $14.9 billion last year, "principally because of the group's strategy to discontinue business which had been identified as unlikely to be of long-term interest."
